The stock prices of major U.S. health insurers, including UnitedHealth, Humana, Centene, and Elevance Health, experienced a decline on Wednesday following comments from UnitedHealth Group about reimbursement rates for Medicaid being affected by enrollment difficulties that started about a year ago.
During the Bernstein investor conference, a UnitedHealth executive mentioned that the company had to deal with an extended process of redetermination for Medicaid in order to ensure that utilization and rates remained aligned. Insurers determine premiums based on expected enrollment and medical service usage by members.
The COVID-19 pandemic policy mandating the maintenance of Medicaid enrollment for those with low income ended in April 2023. States were then required to reassess the eligibility of individuals for coverage. Approximately 22 million people were disenrolled from Medicaid and CHIP insurance programs by May 23, with renewals still in progress for 22 million others. About 49 million people had their coverage renewed.
Analyst Scott Fidel from Stephens noted that investors have been dealing with rate and cost mismatches in Medicare Advantage for the past year and now this issue may be emerging in Medicaid plans as well. In addition to Medicaid programs, UnitedHealth and other insurers also handle health plans for Medicare recipients aged 65 and older or with disabilities. There was an unexpected rise in healthcare utilization within those plans towards the end of 2023 and beginning of 2024.
Overall, the challenges facing U.S. health insurers related to reimbursement rates and enrollment disruptions are impacting the industry, leading to declines in stock prices for major players like UnitedHealth, Humana, Centene, and Elevance Health. These developments have significant implications for insurers and the broader healthcare sector as they navigate changing dynamics within government programs like Medicaid and Medicare.
In summary, U.S health insurers experienced a decline in stock prices on Wednesday after comments from UnitedHealth Group about reimbursement rates being affected by enrollment difficulties in Medicaid programs that started over a year ago
